‘So how much money does a brewery make? Can we all retire from our Professional jobs? What are the profit margins like?’

We do want to make you all great beer to drink, but we don’t want to do it for free…. The business needs to be viable.

We have spent a lot of time lately drawing up detailed spreadsheets of the predicted operational profit and loss. This meant a lot of market research; e.g., sitting in craft beer bars counting how many beers people generally drink and how many people go through in an evening. It also meant looking into our likely expenses and also how big our system needs to be to cater for the predicted volume of beer that you will all drink.

We need to know all this to figure out how big our system should be, how much beer would hopefully be sold over the bar and how much would be sold wholesale.

Thankfully the craft beer industry is quite open when asked ‘so, how many kegs do you sell in a week wholesale and over the counter?’.

Being scientists, we all love spreadsheets. We had to work out the size of kegs (yes they differ between countries… https://en.wikipedia.org/wiki/Keg), how many beers per keg and the predicted volume of beer we would sell. Then we had a few different scenarios (low sales, medium sales and high sales) to counter for the range of uncertainty in predicted sales. Once we knew a rough idea of predicted sales, we concluded that the system size we were eyeing off was about the right size (15-20bbl).

We knew that the selling price of 1 litre of beer over the bar was approximately $18-20, and if it were sold wholesale it would be approximately $6 per litre. Remember though this is the sale price of beer, it isn’t the profit. We also have to factor in the cost to make beer; ingredients, head brewer, liquor excise, water, power, rent, insurance, loan repayments etc. The biggest expense in there is actually the liquor excise (https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Alcohol-excise/Excise-rates-for-alcohol/). That’s why craft beer is so expensive, the cost of the excise gets passed onto the consumer.

There are a lot of guestimates of certain aspects, but we are giving it our best guestimate to figure out if this whole brewery thing will actually be worthwhile. We need to be able to pay our own house mortgages, living expenses and look after kids.

We have taken the dive to start up a brewery!

Yes it is exciting, but also slightly frightening.

You know that point in decision making when you are totally committed. You are at the point where you can’t turn back. The point where it means it’s real. It’s actually happening. When you decide you are going through the amber light instead of stopping. All systems go! That’s where we are now and here is our story.

The brewery idea was conceived separately by each of us. ‘Us’ being Scott, Tony and Jayne. We each love beer and work as environmental specialists in the resources industry. The environmental industry is quite small, and we all worked together at some point in time over the past 8 years.

With his passion for great beer, Scott had been planning this for some time. Scott is a project manager and environmental engineer in the gas industry. Scott was the founder of the Helios Brewing Company and he had taken the initial huge steps to develop the Helios brand, purchase a suitable property and to start the long process of getting Development Approval from the Council.

And yes, Tony and Jayne are married, and make up The Rutter’s portion of the Helios Brewing Partnership. The Rutter’s loved the thought of owning a brewery but to make that jump was risky, especially with three small children. But, when Tony’s position as an environmental specialist in the gas industry became redundant, the brewery idea starting to become a viable option.

Through mutual friends, Scott heard that The Rutter’s were toying with the idea of a brewery and The Rutter’s heard that Scott was looking for a business partner. So, over a few beers in late 2016 we discussed a partnership to become co-owners of Helios Brewing.

Sounds like a simple process, but in fact the actual legal side business partnerships is complicated. We needed a lawyer to draft up the agreements, then we had to read through the agreements… yawn…. and understand what they actually meant. Then pay $1000s of dollars for the lawyers fees. It still wasn’t simple. There are business names, constitutions, trust agreements, partnership agreements and discretionary trusts. Each with enough terms and conditions to make your head spin. It was painstakingly boring to review, but it was important. We learnt that Google was not overly helpful when trying to understand what certain terms mean or types of business structures. It was handy to have knowledgeable accounting and business friends who can help out.

Everyone we talk to says we need to make sure this part is set up properly, but the complex web of trusts and business names is confusing. We are still getting out heads around what entity needs a TFN or an ABN.

Lessons learnt, get a trusted accountant, get a lawyer and expect to pay.